If you are one of the many people who walked away from your home before filing for bankruptcy, you might still owe the bank some cash. Generally, when you walk away from your mortgage, the bank will foreclose on your home, sell it, and likely take the loss on that sale (the selling price is usually lower than what you might have owed the bank).
However, Jacksonville Bankruptcy Lawyers are seeing an increase in what is called a “deficiency judgment.” Banks might ask for a deficiency judgment, which is essentially a lawsuit filed by the bank against you. It means the bank wants you to pay the difference between what you owed on the home and what it sold for.
For example, let’s say you walk away from a mortgage that you owe $200,000 on. The bank forecloses on your home and sells it for $50,000. The bank might then seek a deficiency judgment. If the court grants the judgment, you’ll be on the hook for that $150,000 + interest.
The bank doesn’t have to file the judgment at the time of your bankruptcy. In Jacksonville and the rest of Florida, a bank has five (5) years to file for a deficiency judgment. Once filed they can try place liens on assets for 10 years and renew for another 10. (A total of 25 years) So, even if you lost your home in foreclosure or short sale a few years ago, you could still be subject to a deficiency judgment.
However, filing for bankruptcy could wipe out the deficiency debt that you owe. Since the debt is now unsecured, it can be discharged in a Chapter 7 and possibly discharged in a Chapter 13. If you do not have a judgment against you yet, your Jacksonville Bankruptcy Lawyer could also get a “written waiver of deficiency judgment” during your bankruptcy proceedings. If you are planning on filing bankruptcy, contact a Jacksonville Bankruptcy Attorney. Or, if your home is being foreclosed on, contact us to discuss your options.